The government's education policy machine has been in overdrive this week.

Within a few days we have had a major overhaul of the secondary school curriculum, long-term thoughts about replacing A-levels, and a major review of the university system.

Not surprisingly, the plan to allow universities to charge fees of up to £3,000 a year has hogged the headlines.

So it is perhaps time to focus on some of the other, equally important aspects of the reforms which have received less attention.

What's in a name?

First, do these changes herald a new split between research-led universities and a new tier of teaching-only institutions?

The fears that the government would strip some universities of PhD-awarding powers proved unfounded.

However the government has come at this from a different direction: it is changing the definition of a university.

At present an institution can only claim the title "university" if it offers research-based degrees. This will change so institutions with no research staff or research students can qualify.

Research focus

The whole thrust of the White Paper is towards greater specialisation and differentiation in the university sector.

The Education Secretary, Charles Clarke, set out his thinking in a letter to the Higher Education Funding Council for England, released the day after the White Paper.

It shows he intends to use the extra government cash for higher education as both a stick and a carrot to drive change in the direction the government wants.

So the very best and biggest research departments - those getting the top 5* rating - will get the lion's share of the extra research funds.

Ministers have looked at what is happening in the big universities abroad and have seen the problems our top universities are having to compete.

And teaching focus

It does not want the new money to be spread thinly. Quite simply, research activity will be rationalised and concentrated in a few institutions so they can compete with the world's best.

This may go some of the way towards appeasing those elite institutions - like Imperial College or Oxford - which had been hoping they would be allowed to charge much higher fees than the proposed £3,000 maximum.

At the same time, there will be a cash-led push to get some universities to make teaching their main focus.

Those which excel in teaching will earn a new (very New Labour) title: Centres of Excellence.

Over one-third of all universities could receive this accolade and there will be £35m to back it up in 2005-6.

A barely-noticed line in Clarke's letter appears to spell out a controversial move towards performance-related pay, along similar lines to changes in schools.

The government gives few details but says it wants "to see better pay differentiation between teachers". That could prove interesting in the senior common rooms.

Diversity

We know the government wants expansion but it also wants to direct this growth in a particular way. A ministers have said, there will not be "more of the same".

The plan is for more flexible study so students can build up a degree by dividing their studies into component parts, perhaps taken at more than one institution.

The favoured model is the two-year foundation degree with the option for a further year to turn this into a full honours degree.

So far the foundation degree has started slowly with only around 12,000 students enrolled.

But universities will get financial help to develop more of these degrees, aimed particularly at the so-called "associate professional skills gap".

So these will be vocational, practical qualifications.

Expansion of the new

The planned growth in student numbers is for an extra 14,000 students next year, a further 19,000 the year after, and yet another 23,000 in the year after that.

Most of these extra students will be taking foundation degrees.

So most of the growth is likely to be at the former polytechnics, or indeed in further education colleges, not at "red brick" institutions or Oxbridge.

However it will not be all milk and honey for the new universities.

The new university system will be much more of a marketplace.

Price pitching

It will be a differentiated market, so Oxford may not be competing with Thames Valley University. But competition there will certainly be.

Pricing degrees will be very difficult indeed for vice-chancellors.

Price too low and you could lose money, price too high and you could lose students.

Equally, prestige and price could be closely associated. Will Cambridge dare to charge less for its degrees than Oxford?

Bounty hunting

Chasing students from poorer backgrounds will also involve difficult financial calculations.

At present it is well known that students from less traditional university backgrounds are, overall, more difficult to recruit and more likely to drop out.

This makes them more expensive. So universities get a 5% funding premium for such students. This is now to rise to 20%.

The implications of this - and of the new Access Regulator - for university admissions will be very closely watched by the independent schools and by middle-class parents who fear that "social engineering" could disadvantage applicants from affluent homes and prestigious schools.

Mergers loom

All of this means a huge shake-up for universities.

The White Paper seems to relish this. It sounds a warning note to universities who are unable to compete in this new competitive world.

"Some weaker institutions," it says, "have been propped up rather than turned round."

More ominously still for some newer universities, it adds: "there is still more scope to rationalise resources to improve cost-effectiveness".

In plainer language, that means more university mergers, take-overs, or even closures.